Index dips as banks and miners lose ground

The S&P/ASX 200 Index shed 4.7 points, or 0.1 per cent, to 4262.7.

CommSec market analyst Steve Daghlian said the market had little to work with after a weak lead from US markets overnight.

The German parliament overwhelmingly approved

a second loan package for Greece, but that was expected, Mr Daghlian said.

Mining and financial stocks, which represent about 60 per cent of the Australian market, were lower. ANZ was the weakest of the big four banks, losing 20?, or 0.9 per cent, to $21.88. NAB fell 20?, to $21.88, Commonwealth 29? to $49.15 and Westpac 3? to $20.68.

Telstra rose 4?, or 1.2 per cent, to $3.27 after the competition watchdog approved plans to split the company in two.

BHP Billiton was 7? softer at $35.75 while Rio Tinto gained 30? to $67.70.

This reporting season has seen "cyclical" stocks those that rise and fall with economic growth significantly re-rated to represent the pick-up in domestic economic activity.

As financial house Goldman Sachs points out, large-cap industrials with exposure to domestic conditions are up about

18 per cent since January 1, outperforming defensive stocks by 15 per cent.

That has given some of the retailers cause to cheer, with the industry enjoying a rally this month, due largely to the cyclical bounce over summer, the chance of rate cuts and the prospect of further mergers and acquisitions (such as Billabong).

Over the past seven weeks, retailers Harvey Norman (up 12.2 per cent), Myer (up 16 per cent) and the Reject Shop (up 14.5 per cent) have risen substantially.

And Kathmandu, the hiking and outdoors retailer, has had its second-best monthly rise since it listed on the ASX in November 2009. The company, up 18.9 per cent since February 1, has clawed back some of the losses from the preceding three months.

After Kathmandu issued its last profit warning, in December 2010, its shares bottomed out at $1.20. Yesterday they closed at $1.51.

Still, fund managers warn the rally needs to be put into context.

"The whole sector is coming off a very low base," said ATI Asset Management's head of research, David Liu. "Over the six or 12 months leading up to February, it's one of the worst-performed sectors in the market."